Park v. Nazari CA2/3 ( 2021 )

Filed 10/20/21 Park v. Nazari CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(a). This opinion has
not been certified for publication or ordered published for purposes of rule 8.1115(a).
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
CHOP WON PARK et al., B306648
Plaintiffs and Respondents, Los Angeles County
Super. Ct. No. BC422025
v.
KELLY NAZARI et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los
Angeles County, Malcolm H. Mackey, Judge. Affirmed.
Robie & Matthai and Kyle Kveton for Defendants and
Appellants.
Spainhour Law Group and Kevin Spainhour for Plaintiffs
and Respondents.
_______________________________________
INTRODUCTION
Defendants and appellants Kelly Nazari, Shahrokh Nazari,
and Shawn Nazari (Nazari defendants) appeal from an order of
the trial court denying their motion to set aside judgments
entered against them in 2013 and 2017. The Nazari defendants
argue that the judgments are void because one of the plaintiffs in
the case, True World, a limited liability company (True World),
was dissolved in 2011. Accordingly, they argue the court erred by
failing to set aside the judgments under Code of Civil Procedure
section 473, subdivision (d), or under the court’s inherent
equitable power.
We conclude, as the court did, that the Nazari defendants
fail to establish that the judgments are void. Accordingly, we
affirm.
FACTS AND PROCEDURAL BACKGROUND
Because the facts necessary to our decision are limited, we
provide only a brief summary of the proceedings below.
Plaintiff and respondent Chop Won Park initiated the
present lawsuit against the Nazari defendants and others in
September 2009. (Super. Ct. L.A. County, No. BC422025.) An
amended complaint filed in July 2010 added True World as a
plaintiff.
A jury trial took place in 2013. The jury found for plaintiffs
and concluded that True World suffered actual damages of
$558,626.07 and Park suffered actual damages of $661,714. The
jury also awarded Park punitive damages against Shawn Nazari
in the amount of $100,000. The court awarded prejudgment
interest on both damages awards and, in November 2013,
ultimately entered judgment in favor of Park for $719,551.40 and
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in favor of True World for $869,164.52. The court subsequently
awarded plaintiffs attorney’s fees of $487,329.50.
The Nazari defendants appealed. In 2016, a different panel
of this court reversed the award of prejudgment interest but
otherwise affirmed the 2013 judgment. In March 2017, and after
the remittitur issued, the trial court filed an amended judgment.1
In March 2020, the Nazari defendants filed a motion to
vacate the judgments and recall the writ of execution. They
asserted mainly that True World had filed certificates of
cancellation and dissolution with the California Secretary of
State on April 11, 2011, and, as a result, lacked standing to sue
or maintain the lawsuit. The Nazari defendants argued that the
judgments were void and asked the court to set them aside under
Code of Civil Procedure section 473, subdivision (d), and/or the
court’s inherent equitable powers.
Plaintiffs opposed the motion. Although the Nazari
defendants claimed that plaintiffs had actively concealed True
World’s dissolution, plaintiffs demonstrated that the Nazari
defendants had been advised of True World’s status in
September 2011. Specifically, plaintiffs noted that they disclosed
True World’s status in their oppositions (and supporting
declarations) to two motions for summary judgment in
September 2011. In addition, True World’s accountant testified to
True World’s status during his October 2011 deposition.
Moreover, plaintiffs urged, the Nazari defendants provided no
reason for their failure to bring this issue to the court’s attention
1Although the respondents’ brief lists Bonnie Nguyen as a defendant
and respondent, she is not a judgment creditor and the reason for her
appearance in this appeal is unclear.
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sooner, i.e., before or during the 2013 trial, and therefore their
motion was untimely.
The court heard argument and denied the motion. First,
the court found the Nazari defendants failed to establish that, as
a matter of law, filing a certificate of cancellation rendered True
World unable to litigate the case. In the alternative, the court
found the Nazari defendants’ motion was untimely because it was
filed nine years after the Nazari defendants knew that True
World had filed the certificate of cancellation.
The Nazari defendants timely appeal.
DISCUSSION
1. Applicable Law and Standard of Review
Code of Civil Procedure, section 473, subdivision (d),
provides that a trial court “may, on motion of either party after
notice to the other party, set aside any void judgment or order.”
“[I]nclusion of the word ‘may’ in the language of section 473,
subdivision (d) makes it clear that a trial court retains discretion
to grant or deny a motion to set aside a void judgment.” (Cruz v.
Fagor America, Inc. (2007) 146 Cal.App.4th 488, 495.) However,
the trial court “has no statutory power under section 473,
subdivision (d) to set aside a judgment that is not void ... .” (Id. at
pp. 495–496.) Thus, on review of a ruling on a motion brought
under section 473, subdivision (d), we generally consider two
questions: whether the judgment is void and, if so, whether the
trial court properly exercised its discretion in setting it aside.
(Nixon Peabody LLP v. Superior Court (2014) 230 Cal.App.4th
818, 822.) “Similarly, a court has inherent power, apart from
statute, to correct its records by vacating a judgment which is
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void on its face, for such a judgment is a nullity and may be
ignored.” (Olivera v. Grace (1942) 19 Cal.2d 570, 574.)
We review the trial court’s determination whether an order
is void de novo and its decision whether to set aside a void order
for an abuse of discretion. (See Pittman v. Beck Park Apartments
Ltd. (2018) 20 Cal.App.5th 1009, 1020.)
2. The court properly denied the motion to vacate the
judgments because the Nazari defendants failed to
demonstrate that the judgments are void.
As just explained, the Nazari defendants were required to
establish as a threshold matter that the judgments are void. We
conclude the Nazari defendants failed to establish that the
judgments are void and, therefore, we need not consider the
Nazari defendants’ numerous other arguments.
A judgment is void if the court “ ‘lack[s] fundamental
authority over the subject matter, question presented, or party.’ ”
(Lee v. An (2008) 168 Cal.App.4th 558, 565, quoting In re
Marriage of Goddard (2004) 33 Cal.4th 49, 56; accord, People v.
The North River Ins. Co. (2020) 48 Cal.App.5th 226, 233 [a
judgment is void only when the court entering that judgment
lacked jurisdiction in a fundamental sense due to the entire
absence of power to hear or determine the case resulting from the
absence of authority over the subject matter or the parties].) The
Nazari defendants contend True World ceased to exist for all
purposes when it filed its certificate of cancellation on April 11,
2011. They further claim that because True World no longer
existed as of that date, True World lacked standing to sue or
participate in the litigation, and that the absence of standing
deprived the court of “jurisdiction in the most fundamental sense”
over the entire proceeding, rendering the judgments void.
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Although the Nazari defendants offer myriad arguments in
support of this theory, we need only consider the threshold
matter of whether True World was able to litigate this case after
its dissolution April 11, 2011. We conclude that under the law in
effect at the time, it was.
As the Nazari defendants observe, the Legislature
substantially amended the statutory provisions governing limited
liability companies in 2012, effective January 1, 2014. (Stats.
2012, ch. 419, § 20; Corp. Code, § 17713.132 [effective Jan. 1,
2014]; Kennedy v. Kennedy (2015) 235 Cal.App.4th 1474, 1485–
1486 [explaining repeal of former section 17000 et seq. (codified
in title 2.5 of the Corporations Code) and enactment of section
17701.01 et seq. (codified in title 2.6 of that code)].) We are
concerned, however, with events that took place in 2011 and
which are therefore governed by the statutory provisions in effect
at that time.
As pertinent here, the former law3 required the members of
a dissolving limited liability company (LLC) to file a certificate of
dissolution with the Secretary of State. (Former § 17356,
subd. (a)(1).) At that point, the LLC could not continue its
business operations, except as necessary to wind up its affairs.
(Former § 17354, subd. (a).) After the wind up was complete, the
members were required to file a certificate of cancellation of the
articles of organization noting, among other things, that a final
2 All undesignated statutory references are to the Corporations Code.
3The statutes at issue are former section 17354 (Added by Stats. 1994,
ch. 1200, § 27) and former section 17356 (Added by Stats. 1994,
ch. 1200, § 27. Amended by Stats. 1996, ch. 57, § 24; Stats. 1998,
ch. 243, § 7; Stats. 1999, ch. 1000, § 34; Stats. 2006, ch. 773, § 43).
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tax return had been or would be filed. (Former § 17356,
subd. (b)(2)(B).) The Secretary of State was required to notify the
Franchise Tax Board of the filing. (Former § 17356, subd. (b)(3).)
Importantly for our purposes, former section 17354,
subdivision (a) provided, “A limited liability company that is
dissolved nevertheless continues to exist for the purpose of …
prosecuting and defending actions by or against it in order to
collect and discharge obligations … .” Subdivision (b) of that
section also provided, “No action or proceeding to which a limited
liability company is a party abates by the dissolution of the
limited liability company or by reason of proceedings for the
winding up and dissolution thereof.” Subdivision (b) indicates
that, under former law, a dissolved LLC could continue to
participate in litigation even after its dissolution was complete,
i.e., after the certificate of cancellation of its articles of
organization was filed. This stands in contrast to current law,
which explicitly provides that “[u]pon filing a certificate of
cancellation pursuant to subdivision (b), a limited liability
company shall be canceled and its powers, rights, and privileges
shall cease.” (§ 17707.08, subd. (c).)
The plain language of the former statute notwithstanding,
the Nazari defendants assert—without citation to any supporting
authority4—that “as a statutory and practical matter, the pre-
2014 Act permitted a limited liability company which was in the
process of dissolution to continue to wind up its affairs and to
prosecute and defend [legal] actions. However, the pre-2014 Act
contains no such saving provision for a cancelled limited liability
4We disregard references to the instructions accompanying the forms,
which are not legal authority.
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company. Indeed, the statutory mandate that an LLC complete
the winding up of its affairs before filing a Certificate of
Cancellation, and the requirement that the limited liability
company file a final annual or franchise tax return for the
calendar year of cancellation make it clear that once a limited
liability company was cancelled, it ceased to exist, and had no
right, power, or privilege to continue to conduct business or to
prosecute or defend [legal] actions.”
The former law does contain one provision to that effect.
Former section 17350.5, subdivision (c), states, “Upon filing a
certificate of cancellation pursuant to subdivision (a), a limited
liability company shall be cancelled and its powers, rights, and
privileges shall cease.” But this provision applies only when “a
domestic limited liability company has not conducted any
business.” (Former § 17350.5, subd. (a), emphasis added.) As
acknowledged by the Nazari defendants, the judgments in the
underlying litigation establish that this provision is inapplicable
here. Further, the fact that neither former section 17354 nor
former section 17356 state, as former section 17350.5 does, that a
dissolved LLC’s “powers, rights, and privileges shall cease,”
suggests the omission was intentional. (People v. Trevino (2001)
26 Cal.4th 237, 242 [“When the Legislature uses materially
different language in statutory provisions addressing the same
subject or related subjects, the normal inference is that the
Legislature intended a difference in meaning.”]; People v.
McCallum (2020) 55 Cal.App.5th 202, 212.)
In sum, the Nazari defendants failed to establish that the
judgments they seek to set aside are void. As a result, they have
failed to demonstrate any error on the part of the trial court in
denying their motion to vacate the judgments.
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DISPOSITION
The order denying the motion to vacate the judgments is
affirmed. Respondents shall recover their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
LAVIN, J.
WE CONCUR:
EDMON, P. J.
MATTHEWS, J.*
* Judge of the Los Angeles Superior Court, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.
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